Pensions

Question 1

Pensions
State pension BR19 needed as may be a gap for grace
She could do class 3

New state pension
10 years min qualifying NI class 1/2/3
Full pension 35yrs
As G&S joined pre/4/16 but reach SPA post 6/4/16-may be transitional arrangements for them.
Increase triple lock inflation, 2.5% or Awe
If entitled to higher on old state then will be protected.
BR19 -apply online, call Future pensions or post. 16-30 days before SPA. Shows estimate of state pension, how many qualifying years to SPA and no. Of qualifying years.
£168.60
Based on NI record, additional pension such as serps and how many years 10-35 you have.

Grace may have ni credits when she has Harry and Emma but need to ask her working records to know if need to pay class 3. If she was class 2 she may have no credit and a gap.

Class 3 flat level payments uk residents who had insufficient class 1 or 2. Can pay cons go back 6 years. Cannot be paid in same tax year state bens paid.

SIPP
Use sipp to meet ATR, xfer into it, manage it himself, invest in collectives, shares, comm property, cash. Useful for drawdown/ business loan

Answer 1

QWPS
Simon will need to give to provide a scheme to anyone contribute earns over LET-

Entitled (under LET 16-74 right to join-co doesn’t have to con but has to tell them)

Non eligible (anyone between 16-21 & spa-74 earning between £6136 and if want to join must arrange and make min cons

Eligible auto enrol anyone 22-SPA within timescale. Can opt out within a month.

Question 2

Salary sacrifice

Forgoe salary for a pension contribution

36000 take home
Make personal con of 120net 150’gross = £1800 con gross
Or

£36000
Salary sacrifice £1800
=nic saving ee 12% £216 can save/add to PP or spend and ER 13.8% £248 can add to pen

Answer 2

Bens
Ni saving ER
Ni saving EE

Inc tax EE Corp tax ER
Take home pay same but higher cons with NI saving
NI saving can be paid into pension

can be used to bring down ANI for Child ben charge and reduce income tax tax relief 60%

Working Tax credits may increase

Cons
Salary reduced for all purposes including DIS and Loans.

Social security bens may reduce

Question 3

ER cons

Tax
Not BIK
No inc tax Simon
No NI Simon or ER
Deduct corporation tax allowable business expense if W&E 

Pensions
Bigger fund growth/income/tax free cash helping to hit retirement objectives
Carry forward greater for ER as tax relief not limited by salary
disposable income maintained

Trust
inside trust so outside estate IHT -greater DBens 75 no charge.
Protected bankruptcy divorce

Answer 3

Benefits

Deductible business expense W&E
Corp tax reducer

Bigger pension, income, tax free cash for Simon

HRT not efficient to pay dividends -more likely to be BRT in retirement

No ER NI -so more tax efficient for co

Corporation tax deducted from pre tax profit -so no NI and no deductions.

Personal cons paid from pensionable earnings mean ER and EE NI

Question 4

Personal con

Income tax relief atv45% as divi move to 7.5% and bRT

CGT IHT free

Higher fund retirement income tax fc
Maintain lifestyle
Trust
IHT outside and under 75 death bens

Answer 4

Er con

Deductible business expense corp tax

Higher carry forward

Not bik-no inc tax Simon and no Ni Er EE

Trust
IHT
Death 75